Cepheid Takes Hit on False MRSA Testing Claim

Before you read this, please know I do not own this stock. I do
recommend it in my service. I am writing this because a hatchet job has
been done on a product category that can save tens of thousands of
lives and because a company's stock took a hit for no reason.

That
company, Cepheid (NASDAQ:CPHD), took a major hit Monday after the close due
to an article in the Journal of the American Medical Association -- an
article that should never have been published and if it was vetted, the
people who agreed to its publication should check into a hospital - next time they are not feeling
well - that does not do any MRSA testing.

The
article claimed that MRSA testing did not help reduce MRSA infections -
which of course is not only illogical but utter nonsense if you live in
the real world. The study at the core of the article was based in
Switzerland (University of Geneva) and I have been told by sources that
this hospital used home brewed, home built tests -- not a standard test
from Cepheid or competitor Becton Dickinson (NYSE:BDX). A more detailed criticism
was published by Betsy McCaughey, founder and chairman of the Committee
to Reduce Infection Deaths, a non-profit with an obvious goal. Her
critique is found below, verbatim. The organization's website is
www.hospitalinfection.org.

Let's cut to the chase -- this article
is quasi-science that is a short seller's dream. For those of you more
interested in the truth and the potential for MRSA testing to save
lives (and help companies succeed), look at the the Veterans
Administration. The VA has arguably one of the toughest
potential MRSA problems in the country due to the nature of their
patient population. They reduced MRSA infections by more than 70% with a
pilot program with testing at its core and is now pushing that program
nationwide. Cepheid has captured the vast majority of the testing
business at the VA. Enough said, read the letter from Ms. McCaughey.

Last
note: some unsolicited, non-stock advice -- don't get any procedure done
in a hospital that does not do comprehensive MRSA testing -- no one in
my family will. Am I paranoid? A teacher in the school situated next
door to my son's high school died a few months back for she was
diagnosed with a malady other than MRSA and was sent home. She died of
MRSA.

The rebuttal letter -- verbatim -- hope you don't mind Ms. McCaughey. If you do, contact me and I will pull it down.

March 11, 2008
New York, New York

JAMA Article Provides False Support for CDC's Do-Nothing Position on MRSA

A
new study in the Journal of the American Medical Association [JAMA]
purports to show that screening for MRSA (methicillin-resistant
Staphylococus aureus), a simple skin or nasal swab, is not effective in
reducing MRSA hospital infections ("Universal Screening for
Methicillin-Resistant Staphylococcus aureus at Hospital Admission and
Nosocomial Infection in Surgical Patients," JAMA vol. 299, no. 10,
March 12, 2008).

The findings of the authors will be seized upon
by the Centers for Disease Control and Prevention [CDC] and advocates
of the do-nothing status quo. But the study is seriously flawed -
rendering its findings meaningless.

1. Researchers used a 'rapid
test,' but many patients were not tested until they had already been in
the hospital for twelve hours. Furthermore, the results of the MRSA
tests were not acted upon for another 22½ hours on average. Most
patients had completed more than half of their hospital stay before
their results were known. Therefore, the precautions they needed -
isolation, proper antibiotics, chlorhexidine baths - were taken late or
not at all.

2. Unbelievably, almost a third of surgical patients
(31%) who tested positive didn't get their test results until after
their surgery. Therefore they too didn't receive any of the precautions
they needed. Some people carry MRSA germs in their noses or on their
skin without realizing it. The bacteria do not cause infection unless
they get inside the body - usually via a catheter, a ventilator, or an
incision or other open wound.

3. No weekly MRSA testing was
conducted, which is de rigour when conducting universal screening to
prevent patients colonized with MRSA from passing it on to other
patients in the hospital.

4. A previous study by the same lead
author at the same location, The University of Geneva Hospital, found
that universal screening on admission with preemptive contact
precautions (the way it's supposed to be done) decreased MRSA
infections in the medical intensive care unit.

The study
released today, says Betsy McCaughey, Chairman of the Committee to
Reduce Infection Deaths, "doesn't prove that MRSA screening is
ineffective. The study omits the precautions that are supposed to
follow a MRSA positive test result. It's like testing a recipe, but
omitting half the ingredients or test-driving a car without the tires."

Today's
JAMA article provides false support for the CDC's persistent do-nothing
position on the dire problem of M.R.S.A. The CDC's lax guidelines
continue to give hospitals an excuse to do too little.

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